Singapore: Application Of SOPA Timelines Notwithstanding Termination Of Contract

In CHL Construction Pte Ltd v Yangguang Group Pte Ltd [2019] SGHC 62, the Singapore High Court ("SGHC") considered whether, with respect to SOPA claims, contractual provisions relating to SOPA timelines survive termination of the contract.

On 9 July 2018, the defendant subcontractor completed the works for the plaintiff main contractor, and a Certificate of Substantial Completion ("CSC") was received the next day. Shortly after, the parties' contract was terminated. The defendant then submitted its penultimate payment claim on 30 August 2018 for works done until completion and for half of the retention monies. However, it was stipulated in Clause 37 of the parties' contract that the defendant had to withhold its penultimate claim "until three months after the CSC has been received by" the plaintiff. The dispute therefore centred around whether the penultimate payment claim was served prematurely, in contravention of s 10(2)(a) SOPA.

During adjudication, the adjudicator determined that given the termination of the contract, parties no longer had to perform their remaining obligations therein and as such, clause 37 (a remaining obligation on timeline for payment claim) was no longer applicable. Contrary to the adjudicator's determination, the SGHC held that the "termination of contract subsequent to the point of time the statutory entitlement to payment had arisen and accrued does not alter the timeline for service of a SOPA payment claim that applies to that contractor's accrued statutory entitlement to payment". In other words, since the defendant was claiming for works done before the termination, its statutory entitlement to payment had already arisen and the contractual timeline would continue to apply pursuant to s 10(2)(a) SOPA. The adjudication determination was thus set aside.

This case makes clear that even if the contract has been terminated, contractual timelines must still be adhered to for payment claims under SOPA for work done prior to termination.

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